A W-2 forms report employees’ annual wages and the amount of taxes withheld from their paychecks.
A pay stub is a document attached to or accompanying a paycheck as a record of gross earnings and deductions.
Formula to calculate w2 wages from paystub.
- Find your gross income
- Subtract non-taxable Wages eg. partnership income, disability wages, employer insurance etc.
- Account for other deductions and subtract it from the number you got in step two.
- Determine your annual taxes.
- Then subtract the total taxes that will be withheld from your income from your the number you calculated in step three.
Example:
Suppose your gross pay is $ 500,000 per year, if your annual taxes are $ 100,000, calculate your w2 wages.
Since there is no mention of non taxable wages nor other deductions, we will directly subtract the annual taxes from the gross pay.
= 500,000 – 100,000
= 400,000
Therefore, your w2 wages for the year are $ 400,000.
